Income Tax Appellate Tribunal - Delhi
Mundra Credit & Investment P Ltd., New ... vs Department Of Income Tax on 10 October, 2011
IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH "E" DELHI
BEFORE SHRI RAJPAL YADAV AND SHRI K.G. BANSAL
ITA No. 903(Del)/2011
Assessment year: 2002-03
Income-tax Officer, M/s Mundra Credit & Investment
Ward 5(4), New Delhi. Vs. (P) Ltd., 410-412, 18/12,
WEA Karol Bagh, New Delhi.
PAN: AAACM8117D
(Appellant) (Respondent)
Appellant by : Shri R.S. Negi, Sr. DR
Respondent by: Shri H.K. Batra, C.A.
Date of Hearing : 10.10.2011
Date of pronouncement: 14.10.2011.
ORDER
PER K.G. BANSAL : AM The only substantive ground taken in this case is that the ld. CIT(Appeals) erred in deleting the addition of Rs. 13.30 lakh made u/s 68 as unexplained credit and Rs. 6,650/- as unaccounted cash expended for obtaining accommodation entry of the aforesaid amount.
2. The facts are that the assessee had filed its return on 07.10.2002 declaring nil income. The return was processed u/s 143(1) on 30.01.2007. Thereafter, the AO received information from the investigation wing of the department dealing with enquiries conducted by it in accommodation 2 ITA No. 903(Del)/2011 entries given to various assessees by various entry-operators. The assessee had also shown receipt of three amounts aggregating to Rs. 13,30,000/- from M/s MKM Finsec (P) Ltd., which were stated to be in the nature of accommodation entry. Based upon this information, notice u/s 148 was issued, and the assessment proceedings were initiated. The case of the assessee was that it received sale proceeds from the aforesaid concern in respect of sale of shares of Assam Entrade Ltd. ('Assam' for short) and Saraswati International Ltd. ('Saraswati' for short). The AO, however, did not accept this explanation on the ground that the assessee has not been able to bring on record the broker's note from MKM Finsec (P) Ltd. Accordingly, it was held that the aforesaid entries were in the nature of accommodation entries. Therefore, an amount of Rs. 13,30,000/- was added to the income u/s 68 of the Act. Another amount of Rs. 6,650/- was also added on account of the commission paid to MKM Finsec (P) Ltd. for obtaining accommodation entries.
3. The ld. CIT(Appeals) upheld the action regarding issue of notice u/s 148 by saying that there was prima facie evidence before the AO to come to the conclusion that the income had escaped assessment. However, 3 ITA No. 903(Del)/2011 in regard to the addition, he considered the explanation of the assessee that the shares were purchased in past, shown in the account, the shares were sold periodically and all the shares of Saraswati acquired earlier were sold in this year. Thus, there was nothing in the transactions to show that the receipt of sale proceeds was in the nature of accommodation entries. Thus, both the additions were deleted.
4. Before us, the ld. DR referred to the findings of the AO and the ld. CIT(Appeals). It is submitted that the assessee was not able to bring any evidence on record regarding sale of shares. Even the broker's note has not been placed on record. Therefore, it cannot be said that the money credited in the books represents the sale proceeds. In absence of any other explanation, the nature and source of the money stands unexplained and the provision contained in section 68 is applicable. 4.1 On the other hand, the ld. counsel for the assessee submitted that the shares were acquired in past. 3500 shares of Assam were sold in the period relevant to assessment year 1998-99 and 4500 shares in the period relevant to assessment year 2001-02. In this year, 2200 shares were sold and the balance number of shares are shown in the balance- 4 ITA No. 903(Del)/2011 sheet of this year. Similarly, 80,000 shares of Saraswati were purchased in the previous year relevant to assessment year 2000-01, all of which were sold in this year for a sum of Rs. 8.00 lakh. These facts are ascertainable from page nos. 63 and 88 of the paper book. Therefore, it is argued that the transactions cannot be said to be in the nature of accommodation entries.
5. We have considered the facts of the case and submissions made before us. The details placed in the paper book show that the shares of the two companies were purchased in earlier years. The shares of Assam were sold periodically and 2200 shares of this company were sold in this year. The shares of Saraswati were sold in one go in this year. The case of the assessee is that the purchases and sales have been recorded in the books of account. These books have been maintained in accordance with the provisions of Companies Act. The only objection of the AO is that the assessee had failed to produce broker's note from MKM Finsec (P) Ltd., a company which has indulged in furnishing accommodation entries of various kinds to a large number of persons. According to us, this failure does not displace the entries made in the books of account. As a matter of fact, shares of Assam were sold in earlier year also but no such 5 ITA No. 903(Del)/2011 action was taken by the revenue. Therefore, in absence of any firm evidence on record contrary to the entries made in the books of account, the balance of convenience is in favour of holding that the entries represent sale proceeds of 2200 shares of Assam and 80000 shares of Saraswati.
6. In the result, the appeal is dismissed.
Sd/- sd/- (Rajpal Yadav) (K.G.Bansal) Judicial Member Accountant Member SP Satia 14/10/2011 Copy of the order forwarded to:-
M/s Mundra Credit & Investment (P) Ltd. New Delhi.
ITO, Ward 5(4), New Delhi.
CIT(A) CIT The DR, ITAT, New Delhi. Assistant Registrar.